American Depository

Receipts and
Global Depository Receipts

Prepared By:
Shiraj Sherasia (09020242039)
Shruti Gupta (09020242040)
Shruti Srivastava (09020242041)
Swati Randhawa (09020242042)
Teena Deuri (09020242043)
Avinash Tirkey (09020242044)
Vinod Tripathi (09020242045)
 Global Depository Receipt
• Global Depository Receipt means any instrument in the
form of a depository receipt or certificate created by the
overseas depository bank outside India and issued to
non-resident investors against the issue of ordinary
shares or Foreign Currency Convertible Bonds of issuing
company .
• A GDR is similar to an ADR, but is a depositary receipt sold
outside of the United States and outside of the home
country of the issuing company.
• Most GDRs are, regardless of the geographic market,
denominated in United States dollars, although some trade
in Euros or British sterling.
• There are more than 900 GDR’s listed on exchanges
worldwide, with more than 2,100 issuers from 80 countries.
• The exchanges on which the GDR trades are chosen by the
company.

• Currently, the stock exchanges trading GDRs are the:

1. London Stock Exchange,

2. Luxembourg Stock Exchange,
3. Dubai International Financial Exchange (DIFX),
4. Singapore Stock Exchange,
5. Hong Kong Stock Exchange.
 GDR as a Financial Instrument
• A GDR is issued and administered by a depositary bank
for the corporate issuer.

• The depositary bank is usually located, or has branches,

in the countries in which the GDR will be traded.

• The largest depositary banks in the United States are JP

Morgan, the Bank of New York Mellon, and Citibank.

• A GDR is based on a Deposit Agreement between the

depositary bank and the corporate issuer, and specifies
the duties and rights of each party, both to the other party
and to the investors.
• A separate custodian bank holds the company shares that
underlie the GDR.
• The depositary bank buys the company shares and
deposits the shares in the custodian bank, then issues the
GDRs representing an ownership interest in the shares.
• The DR shares actually bought or sold are called
depositary shares.
• The custodian bank is located in the home country of
the issuer and holds the underlying corporate shares of the
GDR for safekeeping.
• The custodian bank is generally selected by the
depositary bank rather than the issuer, and collects
and remits dividends and forwards notices received from
the issuer to the depositary bank, which then sends them to
the GDR holders.
• The custodian bank also increases or decreases the number
of company shares held per instructions from the
depositary bank.
 GDR Purchase by An
Investor
• An investor calls broker to buy GDRs for a particular company.

• The broker fills the order by either buying the GDRs on any of the
exchanges that it trades, or by buying ordinary company shares
in the home market of the company by using a broker in the
issuer's country.

• The foreign broker then delivers the shares to the custodian bank.

• The investor’s broker notifies the depositary bank that ordinary

shares have been purchased in the issuer's market and will be
delivered to the custodian bank and requests depositary shares to
be issued in the investor’s account.
• The custodian notifies the depositary bank that the shares
have been credited to the depositary bank’s account.

• The depositary bank notifies the investor’s broker that the

GDRs have been delivered.

• The broker then debits the account of the investor for the
GDR issuance fee.
 GDR Sale by an Investor
• An investor instructs his broker to sell his GDRs.

• The broker can either sell the shares on the exchanges

where the GDR trades, or the GDRs can be cancelled, and
converted into the ordinary shares of the issuing company.

• If the broker sells the shares on an exchange, then the

broker uses the services of a broker in the issuer's market.

• If, instead, the shares are cancelled, then the broker will
deliver the shares to the depositary bank for cancellation
and provide instructions for the delivery of the ordinary
shares of the company issuer.
• The depositary bank instructs the custodian bank to deliver
the ordinary shares to the investor’s broker, who then
credits the account of its customer.